Federal Budget 2024-25: Relief Measures Now, Rate Hikes Ahead?

Published by Otto Dargan on May 15, 2024

The Federal Budget 2024-25 promises measures to address the cost-of-living squeeze, support homebuyers and boost housing supply. These measures are likely to be met with a sigh of relief from mortgage holders nationwide. But a potential tightening of the monetary screws by the Reserve Bank could dampen the positive sentiment.

Here’s a breakdown of the key points relevant to home loan borrowers and those looking to enter the property market.

Easing Cost-of-Living Pressures

The Budget offers various relief measures to ease the financial burden on Australians.

  • The government is providing $1.9 billion to increase Commonwealth Rent Assistance by 10%, benefiting nearly a million households.
  • Cheaper medicines will be available under a $3 billion agreement with community pharmacies, and $3 billion in student debt will be waived to make loans fairer.
  • New power bill relief includes energy rebates of $300 for households and $325 for small businesses. These are expected to reduce headline inflation by around 0.5 percentage points in 2024-25.

Building More Homes For Australians

The Budget focuses on addressing housing shortages and affordability issues with a comprehensive plan:

Housing Investments

  • The government is investing $6.2 billion in new housing.
  • States and territories will receive an extra $1 billion to deliver the infrastructure for new housing.
  • There is also a $1.9 billion investment in loans for social and affordable homes.
  • Additional $1.9 billion in concessional finance for social and affordable homes
  • An extra $423 million for the National Agreement on Social Housing and Homelessness.

Tax Cuts For Every Australian Taxpayer

From 1 July 2024, the government will implement tax cuts:

  • The 19% tax rate will be reduced to 16%.
  • The 32.5% tax rate will be reduced to 30%.
  • The threshold for the 37% tax rate will increase from $120,000 to $135,000.
  • The threshold for the 45% tax rate will increase from $180,000 to $190,000.

These are the so-called Stage 3 Tax Cuts, changes aiming to provide meaningful cost-of-living relief, especially for middle-income Australians, without adding to inflationary pressures.

Supporting Wages Growth

The government’s efforts to boost wages and reduce inflation have led to substantial wage growth for the first time in over five years. A continued emphasis on gender equality has prompted the Fair Work Commission to research occupations and industries with gender pay gaps and potential undervaluation of work.

Funding has been committed to support wage increases for aged-care workers and the early childhood education and care workforce.

Commentary From Home Loan Experts

Home Loan Experts’ Senior Mortgage Broker Jonathan Preston commented on the lack of new support for first-home buyers: “While we already have the 95% waived LMI for first-home buyers, increasing the price limit caps could be useful.”

We’re Here To Help!

If you want to know more about how the Federal Budget affects you or you’re looking to buy a home, our expert mortgage brokers are here to help.

Now is a great time to explore your options before rates climb higher.

Call us on 1300 889 743 or fill out our free online assessment form and one of our Home Loan Experts will get back to you!

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